Key insights:

1. The National Retail Federation has increased its projections for US ocean imports in Q4, suggesting that many importers are frontloading shipments ahead of a possible East Coast port strike in January and anticipated tariff increases by the Trump administration next year.

2. This relative volume strength may explain why transpacific ocean rates which had fallen sharply in early October have been about level around the $5,000/FEU mark since then. And with LNY starting at the end of January this year, rates may face some additional pressure starting in late December.

3. In two separate labor disputes in Canada, port operators have locked out union workers in Montreal and the ports of Vancouver and Prince Rupert halting container operations there. Government mediation has so far failed in British Columbia. An extended lockout will lead to a significant backlog at these ports and diversions could cause congestion and delays at alternatives like Seattle-Tacoma.

4. Asia – Europe rates increased by about 20% to $4,500/FEU on early-month GRIs and so far have remained at that level. Maersk reports a demand rebound, together with European port congestion and blanked sailings, is supporting higher rates. Demand will likely increase further – and earlier than usual due to Red Sea diversions – ahead of Lunar New Year.

5. So far the much anticipated extreme air cargo peak season rate spikes and capacity crunch have yet to materialize. Some forwarders think frontloading to avoid peak season chaos in a market already stretched thin by massive e-commerce volumes may make Q4 much tamer than expected.

Ocean rates - Freightos Baltic Index:

• Asia-US West Coast prices (FBX01 Weekly) fell 4% to $5,208/FEU.

• Asia-US East Coast prices (FBX03 Weekly) climbed 5% to $5,468/FEU.

• Asia-N. Europe prices (FBX11 Weekly) climbed 23% to $4,495/FEU.

• Asia-Mediterranean prices (FBX13 Weekly) climbed 23% to $4,301/FEU.

Air rates - Freightos Air index

• China - N. America weekly prices decreased 18% to $5.48/kg

• China - N. Europe weekly prices fell 3% to $3.84/kg.

• N. Europe - N. America weekly prices increased 7% to $2.39/kg.

Analysis

A month ago, the National Retail Federation projected that post-peak season US ocean import volumes would continue to fall in Q4 with November’s volumes decreasing 10% month-on-month and a further dip expected in December.

In the interim though, the ILA has set a January 15th deadline for a renewed East Coast and Gulf ports strike in the absence of a new contract, and a Trump victory has brought expectations for significant tariff increases next year. The NRF’s latest estimates – with projections for November volumes adjusted up by 13% and even with October, and December projections increased by 6% – suggest that shippers have already started frontloading imports to get ahead of both these possible disruptions.

This relative volume strength may explain why transpacific ocean rates which had fallen sharply in early October have been about level around the $5,000/FEU mark since then, stabilizing well above the $3,000 - $4,000/FEU floor for the year reached back in April when demand eased post the Lunar New Year rush. And with LNY starting at the end of January this year, rates may face some additional pressure starting in late December or early January.

Though there do not seem to be indications of frontloading on the transatlantic, at about $2,600/FEU rates have remained elevated compared to the $2,000/FEU level seen in September, and may reflect capacity reduction measures being taken by carriers.

In Canada, port operators have locked out union workers at the Port of Montreal since Sunday night following the union's rejection of a recent wage increase proposal. The lockout has completely suspended container operations at the port marking another escalation in this ongoing dispute, and the port authority is now calling for government intervention.

At the West Coast ports of Prince Rupert and Vancouver – Canada’s largest container port and the seventh largest in North America – the local ILWU chapter of 700 workers has been locked out for more than a week. Though the labor minister invoked a section of the country’s labor code to force the two sides to restart negotiations, talks ended quickly early this week increasing the likelihood that carriers will start diverting vessels to Seattle-Tacoma instead of waiting out the strike offshore.

These disruptions in Canada are already being felt by importers and exporters that rely on those impacted ports. If the lockouts stretch on – especially at the larger hubs of Vancoucer and Prince Rupert – backlogs at those ports will grow, and diversions to Seattle-Tacoma could lead to delays and congestion there as well.

Asia – Europe rates, which by late September had fallen back to their April-level floor, increased by about 20% to $4,500/FEU on early-month GRIs and so far have remained at that level. Maersk reports that, despite volumes typically declining in November, demand has rebounded recently supporting the rate increases, with congestion in Hamburg, bad weather causing delays in Rotterdam, and an increase in blanked sailings also working in favor of higher prices. Demand will likely increase further – and earlier than usual due to longer sailings avoiding the Red Sea – ahead of Lunar New Year

Air cargo peak season typically begins in November. But while rates and volumes remain strong out of Asia, the much anticipated peak season spike in rates and difficulty in securing space – as e-commerce volumes have already been keeping space tight and rates elevated for much of the year – so far has not materialized.

Some forwarders think that the anticipation of this peak season chaos may have led to enough frontloading that this year’s peak will prove to be much tamer than anticipated.